California Governor Newsom signs senate bill allowing tribes to sue cardrooms

California Governor Gavin Newsom has signed Senate Bill 549, which allows casino-owning tribes to sue the state’s cardrooms or their business competitors. The tribes have been fighting over the cardroom’s use of "player-dealers" and the alleged illegal card games offered by such venues, including blackjack and pai gow poker. The tribes will now be allowed to file one lawsuit against the cardrooms by April 1st, 2025.

The stakes are high since some cities receive nearly half of their budgets from taxes on cardrooms, meaning a tribal victory in court could jeopardize money for police, firefighters, and other local services, notes CalMatters.

The California Senate passed an amended version of the bill on August 31st, 2024. It was originally filed in March 2023 but did not gain traction until this summer. The issue, according to the tribes, is the use of player dealers, also known as third-party providers of proposition player services (TPPPS). These are companies that act as the banks in games such as blackjack and roulette. 

Indian Country has the exclusive rights to gambling in California, per state law and the federal Indian Gaming Regulatory Act. The tribes and cardrooms have coexisted for many years, but in 2007, the cardrooms began using TPPPS. 

Tribes say California voters gave them the exclusive rights to host the disputed table games. However, because they are sovereign governments, the tribes lacked legal standing to sue the state’s 80 or so privately-owned gambling halls scattered across California.

“This law simply provides a reasonable solution to a decade-old dispute and provides clarity to tribes, the state, and commercial card rooms,” California National Indian Gaming Association (CNIGA) Chairman James Siva said in a press release. “This is good and fair public policy for all parties concerned.

“For much of California history, tribes have been precluded from having access to justice to defend what was rightfully ours. However, with the signing of this bill, Governor Newsom is making good on the spirit of his apology to tribes in 2019 by allowing us to simply seek justice to defend our rights.”

While the tribes now have this opportunity to sue the cardrooms, they still do not have the right to take legal action in other situations that they say could potentially compromise their sovereignty. The text of the bill is narrow, and tribes can only sue over the TPPPS issue. Both sides must abide by the court’s decision.

“As one of more than 70 tribal leaders who fought for access to the justice system to protect our voter-granted economic opportunities, I am grateful to the overwhelming majority of legislators and the governor for their support of SB 549,” Viejas Chairman John Christman said via CNIGA. 

“California’s past has been tragic for tribes, but this bill represents an important recognition of our rights and a renewed commitment to the future of the state’s Native people.”

As much as the tribes lobbied for SB549, the cardrooms lobbied against it. They claim that if they are not allowed to use TPPPS, some card rooms could go out of business. If that happens, the cardrooms say, cities across California will lose tax dollars that support valuable services from fire and police to teachers.

The biggest city with cardrooms is San Jose. However, it is the smaller cities that likely have more to lose from a change in tax revenue. According to CalMatters, cities like Commerce and Hawaiian Gardens say their annual budgets will be slashed by at least half if the cardrooms close. 

The political magazine also noted that San Jose, California’s third biggest city by population, receives $30 million per year from cardrooms, which is enough to pay 150 police officers or 133 firefighters. It is not clear whether cardrooms would shut down or change their offerings if a court rules for the tribes.